Reinsurance Australia Corporation (ReAC) – the last of the local reinsurers swept out the door by the industry shake-up of the late 1990s – plans to seek a new licence to operate as an insurer in the personal lines market.

More than four years after going into run-off due to heavy losses, the reinvigorated ReAC is close to completing the run-off. ReAC Chairman Richard Hill told yesterday’s AGM the company has spent the past 18 months thoroughly assessing the Australian general insurance market.

ReAC now has the backing of Guinness Peat Group and Hunter Hall Investment Management. It has been in run-off mode since February 2000, and reported a $39.6 million net profit last year. Its annual report says ReAC has 7.8 times the minimum capital required by the Australian Prudential Regulation Authority (APRA) for a licenceholder.

Nick Kirk, who formerly ran Promina’s home warranty operations, has been appointed CEO of ReAC’s general insurance strategy. A new run-off services division will be led by Mark Moyes. MD Geoff Vines, who replaced Nick Steffey in 2000, will retire, as will board member Philipp Thomas.

Mr Hill told yesterday’s meeting that since late 1999, 771 client relationships have been commuted involving the cancellation of 14,612 reinsurance contracts. A total of 228 clients and 1310 contracts “of any consequence” remain.

The company was forced into run-off by APRA after reporting a $467 million loss in 1999 following a series of claims related to natural disasters, including Hurricane Andrew.

ReAC noted in its last annual report that it may apply to APRA for a new Australian operating licence, although local observers expressed surprise yesterday that it has chosen the highly competitive personal lines market.